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What is a sworn statement?
What is a sworn statement?
A sworn statement is a legal document used in construction projects that lists all contractors, subcontractors, and suppliers providing labor or materials for a project. When signed, it serves as a sworn declaration that the information provided is complete and accurate, meaning the signer is swearing under oath that no parties other than those listed need to be paid for work on the project.
Sworn statements include detailed financial information for each party, such as contract amounts, previous payments, current amounts due, and remaining balances. Because these statements are made under oath, providing false information can result in perjury charges.
For subcontractors, sworn statements create transparency in the payment process, ideally to help prevent payment disputes. They’re typically submitted alongside payment applications, especially when requesting final payment. While not required in most states, Michigan and Illinois mandate sworn statements for all construction projects, with Michigan requiring a specific standardized form. Submitting sworn statements proactively—even when not explicitly required—can build trust with general contractors (GCs) and often results in faster payments. However, accuracy is critical; any discrepancies with sworn statements can have the opposite effect—delayed payments and damaged relationships. Check out this blog post for more tips on managing sworn statements.
Siteline can simplify the sworn statement process through integrations with popular construction accounting systems like Sage 300 CRE, Sage 100, Sage Intacct, Spectrum, and Vista. These integrations automatically pull accounts payable (A/P) information to complete sworn statements and subcontractor affidavits accurately, preventing costly errors and delays. See for yourself—book a no-obligation demo of Siteline today.
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Other construction terms
What is a Project Budget?
A Project Budget, in the construction industry, refers to a financial plan that estimates the costs associated with each phase of a construction project. It includes direct costs such as materials, labor, equipment, and subcontractor charges, as well as indirect costs such as site overheads, insurance, permits, and contingencies. A well-prepared project budget aids in determining the financial feasibility of the project, managing costs effectively, and minimizing financial risks. It serves as a financial guide during the project execution and helps in tracking deviations between projected and actual costs. It is a critical tool for project managers to ensure a project is completed within the calculated cost framework.
What is a Release?
In the construction industry, a release is a legal instrument that acts to terminate any legal liability between the releasor and the releasee, signed by the releasor. It is often used to settle disputes or claims, with one party agreeing to release the other from any existing obligations, responsibility or further legal action in return for a negotiated compensation. It may also refer to a point in a construction project where work is considered complete to a given level, allowing for payment or the transfer of responsibility to the next party involved in the process.
What is the Matching Principle?
The Matching Principle is a crucial accounting concept prevalent in the construction industry. This principle dictates that all expenses must be matched with the revenues they generated in a particular financial period, ensuring that all costs and income for each project are accurately reported on the income statement. For example, if a construction company incurs costs for labor, materials, and equipment in July and August for a project that's completed in September, those costs would be recorded in September when the income is recognized. This principle is essential as it provides a more accurate picture of a company's profitability and financial health for a specific period. It allows construction companies to better manage their cash flows, project budgeting, and financial planning.
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